Which of the following companies would benefit least from Activity-Based-Costing?
A) A manufacturing company with multiple products of various shapes, sizes and complexities
B) A wholesale warehouse company shipping 4,000 products to both retailers and wholesalers
C) An electronics manufacturer producing various electronic products
D) A custom teddy bear company producing bears which are farmed out to local residents who make the bears in their homes

Question

Quizplus · Accepted Answer

Activity-Based Costing (ABC) is most beneficial for companies with diverse products and complex processes, as it helps in accurately allocating overhead costs. A custom teddy bear company, especially one that outsources production to local residents, likely has a simpler cost structure and less diversity in its processes, making ABC less beneficial compared to the other options which involve more complex operations and product diversity.

Which of the Following Companies Would Benefit Least from Activity-Based-Costing